Court action launched to protect power consumers from paying costs of unlawful “Enron clause”

The Government of Alberta took legal action today (July 25) to protect Albertans from an attempt to offload business losses in the electricity market onto the public.

Alberta contends that this attempted offload is being implemented through a regulatory clause that was unlawfully enacted when the province’s electricity system was deregulated.

This clause was lobbied for by Enron, a discredited and now bankrupt US electricity operator at the centre of numerous other controversies and questionable business practices.

The “Enron clause” purports to give power companies the option to hand off unprofitable Power Purchase Arrangements (PPAs) to the Balancing Pool, effectively passing their financial losses and risks on to consumers. It is estimated that the clause will cost up to $2 billion between now and 2020, when PPAs are set to expire.

“The previous government sold deregulated electricity as a way to transfer financial risk to the private sector in return for giving them the chance to earn greater profit. In secret, they did the opposite - setting up a system where consumers bear all the risk. Albertans should not be on the hook for these backroom deals.”

Sarah Hoffman, Deputy Premier “On behalf of the Alberta government, we will be challenging the 2000 action that created the loophole clause that PPA Buyers are now relying on to escape their legal obligations. We will argue that the government had no legal authority to make this change especially not in closed-door proceedings after a PPA public hearing process had concluded - and the clause is therefore void.”

Joseph J. Arvay, Q.C. The court action began today with an originating application for judicial review and declaratory relief. The application seeks an order declaring the Enron clause void in law and an order quashing a recent decision by the Balancing Pool to accept the return of Enmax’s now money-losing Battle River 5 PPA to the Balancing Pool.